Azerbaijan's strategic foreign exchange reserves to reach $74 billion in 2024 Fitch Ratings report

The international rating agency Fitch Ratings has projected Azerbaijan's strategic foreign exchange reserves to reach $74 billion in 2024.

This substantial reserve level is expected to represent 98% of the country's projected GDP for the year, Caliber.Az reports, citing the agency's report on the country.

The majority of these reserves, approximately 80%, are held by the State Oil Fund of Azerbaijan (SOFAZ), with the remaining reserves managed by the Central Bank of the Republic of Azerbaijan (CBRA). This distribution underscores the pivotal role of the country's oil and gas revenues in bolstering its foreign exchange reserves, given that these sectors account for 89% of Azerbaijan's total exports.

Fitch Ratings highlighted that Azerbaijan's net sovereign asset position is projected to reach 71% of GDP in 2024, a significant increase from 50% in 2010. This position is noted to be the highest among sovereigns rated 'BBB' and 'A', indicating strong financial stability.

The report also forecasts a decline in Azerbaijan's current account surpluses, from an estimated 9.3% of GDP in 2024 to 6.4% in 2026. Despite this expected decrease, Azerbaijan's surplus remains one of the highest in the 'BBB' category, ensuring continued, albeit moderated, asset accumulation.

Fitch's analysis points out that Azerbaijan's net external creditor position is anticipated to strengthen to 154% of GDP in 2024, further solidifying its status as one of the strongest among 'BBB' rated sovereigns.